Domestic stocks on the ropes as tariffs land heavy punches

Fast-moving consumer goods and banking reel from tariff left hook; automotive and consumer durables counter with GST-gloved uppercut

- SAI ARAVINDH

To shield against US President Donald Trump's tariff shock, analysts have been advising investors to focus on stocks of domestic-oriented companies, rather than export-centric ones, to minimize potential losses.

Yet, despite these recommendations, stocks in sectors such as fast-moving consumer goods (FMCG), real estate, and both private- and public-sector banking have remained subdued in August (following the initial tariff imposition on August 7).

However, automotive and consumer durables stocks have defied the broader downturn, buoyed up largely by the Centre's promise to reduce the goods and services tax (GST).

This underperformance in many domestic-facing sectors, according to Anirudh Garg, fund manager and partner at INVasset PMS, can be traced to investors adopting a "wait-and-watch" approach, as the tariff announcements—both the initial 25 per cent levy and the subsequent penalty of 25 per cent—coincided with India Inc's weak earnings expectations for the second quarter of 2025-26.